Startup decides on Nashua, not Worcester

Sunday

Feb 10, 2013 at 6:00 AM

Peter Cohan WALL & MAIN

John Joseph is a proud graduate of Worcester Polytechnic Institute and Clark University. But he does not know of any high-tech Worcester-based startups and never thought about locating Nashua, N.H.-based DataGravity in the “Heart of Massachusetts.”

And DataGravity has the makings of a successful high-tech startup. After all, if you have the good fortune of having started and sold a company for more than $1 billion, you have many pleasant options ahead of you. For Paula Long and Mr. Joseph, the option they chose was to start a company that puts an “A+ data scientist” in a box so that companies can tease useful insights out of their massive piles of electronic data.

As they explained in a Feb. 1 interview, DataGravity received a big vote of confidence last month in the form of a $30 million Series B investment led by Silicon Valley’s hottest venture firm, Andreessen Horowitz.

Before getting into the DataGravity story, let’s examine why Andreessen Horowitz invested. As General Partner Peter Levine explained in a Feb. 1 interview, it comes down to his belief in Ms. Long. Mr. Levine likes to invest in technically strong visionaries who he believes can “see into the future of an industry.”

As for Mr. Levine, it takes one to know one. After all, he was one of the first employees of Veritas — rising from engineer to executive vice president there before Symantec bought the company in 2004 for $13.5 billion.

So it’s possible that Mr. Levine, who has worked with Ms. Long for years, sees a kindred spirit. As he said, “Paula is a technical visionary in the storage world and was the co-founder of EqualLogic, a storage company acquired by Dell in 2008 for $1.4 billion.”

But Mr. Levine thinks that Ms. Long gets valuable assistance on the sales and marketing side from Mr. Joseph, who started working with Ms. Long at EqualLogic in 2003 and loves to take Ms. Long’s ideas and get market feedback on them. According to Mr. Levine, “John was also an early member of the EqualLogic team and brings great talent in sales, marketing and operations.”

Mr. Levine joined DataGravity’s board, and he explained that Andreessen Horowitz brings not only money but valuable mentoring to its portfolio companies. This mentoring comes in the form of help from operating partners with expertise in areas such as:

•Sales and marketing — bringing entrepreneurs to Andreessen Horowitz to meet with potential customers such as Proctor & Gamble, General Electric, Coke and AT&T;

•Product development;

•And, hiring executives and engineers.

This guidance fits well with Andreessen Horowitz’s investment philosophy of capitalizing companies with technically brilliant founders — it shuns what Mr. Levine calls “professional CEOs” — whom it aspires to transform into excellent business managers. Mr. Levine sees his role as helping to manage this transformation in a way that fits with the needs of each portfolio company.

Ms. Long has lots of business ideas, but she likes to analyze the ideas, distinguishing “features” from “business opportunities.” She decided that the idea of putting a data scientist into a box for companies in the “enterprise eight million” would be a big business opportunity and part of the next wave.

How so? According to Ms. Long, “There is a huge addressable market. Our approach is a radical change that disrupts existing business models, and we are targeting a customer pain point.”

From that, she believes DataGravity will get useful insights regarding its customers’ “social maps, which documents what they should read, and the company’s mood.” And she believes that these smaller companies will be particularly glad to get these kinds of insights without the cost of hiring data scientists.

While Ms. Long and Mr. Joseph have complementary skills, they put a great value on the people they hire. And they concluded that locating the company in Nashua would give them access to talented engineers and marketers, who live west of Boston near Route 128 and Interstate 495, with experience in building high-tech companies that sell to enterprises. Moreover, Ms. Long helps attract that talent by pointing out that for employees, “Nashua is a reverse commute.”

They argue that starting with Digital Equipment Corp. 50 years ago this area has spawned enterprise-focused companies such as Data General, EMC, Endeca and others that are a source of valuable talent.

Ms. Long and Mr. Joseph believe that this 128-495 enterprise startup common shares many of Silicon Valley’s values. As Ms. Long explained, these include “giving back, disrupting a big space and intellectual humility.”

Moreover, Ms. Long’s advice for young people thinking of starting a company is to go work for a startup and learn what it takes to be an entrepreneur. She takes the responsibility of running a new venture very seriously.

As she explained, “Once you hire someone, you are responsible for someone else’s livelihood — that person’s house, food on the table and college tuition for their children. We identify the leaders among our employees — people who are stepping up and who have lines of people outside their offices seeking help. And we give them opportunities to develop by adding to their responsibilities.”

Mr. Joseph agrees, noting, “That’s why I am partnered with her. We care deeply about people. And helping to develop their careers is good for the company.”

And if Andreessen Horowitz can give Ms. Long and Mr. Joseph the mentoring they need, it would not surprise me if they can transform Ms. Long’s vision for DataGravity into a successful company.

This just leaves me with two questions: Why didn’t Ms. Long and Mr. Joseph consider locating in Worcester? And how would Worcester need to change to make such entrepreneurs decide to locate here?